Asset management industry bullish on securitisation

Malta is set to become a key hub for securitisation, says Andreas Wölfl, Chairman of the Board of Argentarius ETI Management. While securitisation structures have become a lot more transparent since the financial crisis, there is still a need for further transparency to attract new types of investors, he argues.

Can you give an overview of Argentarius and your key markets?

Argentarius is a leading European securitisation company based in Malta. Our key markets are securitisation solutions for the asset management industry, securitisation solutions for European SMEs and listing services. The Argentarius securitisation platform is used by fund and asset managers to structure investment products linked to underlying alternative investments. Investors gain access to the performance and risk of the underlying alternative investment assets. These securitised investment products are known as Exchange Traded Instruments (ETIs) and Liquid Alternatives. 

The Argentarius Financial Vehicle Corporation platform is used by companies searching for finance to issue asset backed securities as a refinancing facility. Our client base in this market are mainly SMEs and project companies. The asset backed securities issues range from plain vanilla bonds as underlying, to hybrid instruments and end up in equities. As a listing agent, we are the link between an issuer of debt securities and the exchange and regulator. We handle the listing process and prospectus approval process. After the listing is complete, we keep the link between the exchange and the issuer to file regulatory announcements. We list corporate bonds, asset backed securities, derivative securities and certificates, warrants and insurance linked securities, but no equities yet.

What have been the key milestones in the history of your sector?

Securitisation started as a financing and risk transfer method. With the Alternative Investment Fund Managers Directive (AIFMD) getting into force, the scope widened to securitisation solutions for the asset management Industry. The AIFMD exempts securitisation transactions falling under the regulation of the European Central Bank. More and more asset managers opt for a securitisation solution as a feeder into fund structures, than a feeder fund under AIFMD since that point. With the disintermediation in the banking industry especially after the financial crisis leading to the visible growth in corporates entering the capital markets and marketplace landing platform, the scope for our industry even further widened into alternative finance solutions. 

What sections of your business do you see delivering the greatest innovation and growth potential?

Our alternative finance platform is seen as the future growth driver of our business. SMEs just started to enter the capital markets for financing beyond the banks. P2P platforms, as well as crowdfunding and marketplace lending platforms, don’t offer listed securities and thus exclude a lot of prospective investors. Our Alternative Finance platform is designed for SMEs, seeking to raise between €5 and €50 million. We are also seeing double digit growth in securitisation as a solution for the asset management industry, especially through the launch of actively managed ETIs and fund-linked ETIs.

Given your portfolio of services, what investment opportunities do you offer both nationally and internationally?

Within Europe we offer investment opportunities into listed investment products as well as listed debt products either as a portfolio of SME originated debt or as a repackaging and listing of mini-bonds. Internationally, we focus on investment products like actively managed ETIs and Fund-linked ETIs.

Looking to the future, what is your growth strategy?

Our growth strategy relies on global expansion of our securitisation services as well as diversification into securitisation solutions for the insurance industry. We nonetheless focus on our core business which is securitisation. We will be a leading provider of securitisation solutions for the asset management industry, SMEs and the insurance industry, but we don’t aim to diversify into other industries beyond listed securitisations and the services provided as listing agent. 

What are the key challenges facing your industry at the moment, and how is your company attempting to tackle them?

Although securitisation structures have become a lot more transparent since the financial crisis, in my opinion there is still room for further transparency to attract new types of investors. We challenge it already by focusing on listed securitisations and fulfil all the disclosure requirements of the EU Prospectus Directive as well as the EU Transparency Directive. 

Have there been any recent statutory or legal developments, which affect companies operating in Malta?

The Securitisation Cell Company Regulation further improved the environment for the securitisation industry. Malta is now prepared to become one of the most important hubs for onshore securitisation vehicles.

How important is it for Malta to attract foreign direct investment and what sectors of the economy offer FDI’s the greatest opportunity and why?

FDI’s are important to support the ongoing outperformance of Malta’s economy. The sectors offering the greatest opportunities are financial services as well as shipping and aviation related services. For financial services a head office in a politically and economically stable country with a pro-business regulatory environment is critical. Malta ticks all the boxes in that regard.

In terms of economic growth as a whole, what are your expectations for Malta in the coming years?

The outperformance of our European peers will continue. I see a stable rise in GDP above that of the EU average.

Andreas Wölfl set up the Argentarius Group in 2007 doing securitisation transactions in Luxembourg. In 2012, he set up Argentarius ETI Management Ltd and the first Securitisation PLC in Malta under the Securitisation Act and transferred the global head office to Malta. He has done more than 100 securitisation transactions with a total volume of above €1 billion. He is responsible for the structuring of securitisation transactions as well as the overall group strategy and oversight of the company. Beside Argentarius Andreas is member of the Advisory Board of the Malta Stock Exchange.



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